The Culture First Podcast - 03 - Team of Teams

Culture Amp CEO Didier Elzinga joins the show to discuss Gen. Stanley McChrystal's book "Team of Teams" and how it relates to organizational structure.

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Transcript

(Edited for grammar and syntax)

Introduction: You’re listing to the Culture Amp Culture First podcast. Culture Amp is a platform designed for companies who like to put culture first. This week Culture Amp CEO Didier Elzinga joins us to discuss General Stanley McChrystal’s book Team of Teams, and how it relates to organizational structure.

Bronwen Clune: Welcome to the Culture First Podcast. I’m Bronwen Clune and I’m joined by David Ostberg, director of Insights and Julie Rogers our Head of People. Today we also have a guest on our podcast, our CEO Didier Elzinga, and we’re here to talk about the Team of Teams. It sounds a little bit like Game of Thrones, Didier.

Didier Elzinga: Just wait.

Bronwen Clune: To kick off, can you tell us what Team of Teams is and how that’s different to other management structures?

Team of Teams: scaling an organization for adaptability

Didier Elzinga: Team of Teams is a term that’s been around for a while but was popularized recently. It’s a way of thinking about how to scale an organization, when your goals are possibly different than they have been in the past. A lot of traditional organizational design is scaled for efficiency, and so you see the more traditional organizational structures like functional hierarchies and so on. The concept of Team of Teams is to scale an organization for adaptability, so how do you create an organization that can respond quickly, can adjust, can react to what's going on in the world?

Bronwen Clune: Why does this work over other models? Why is this the one we landed on?

Didier Elzinga: I think when people get into anything like this they say, “This one’s good, that one’s bad” but it’s never that one odd structure is the best for all situations. It’s a question of what are you trying to achieve and what's the environment that you’re operating in?

The way we are running as an organization, as a fast growth startup, there’s a lot of things changing, a lot of things moving, creating the need for us to adapt very, very quickly. It’s a different type of stress than maybe a slower growing or more traditional structure might have, and so the desire to look at something like Team of Teams is to meet that need. We want to create an organizational structure that prioritizes the ability for the organization itself to grow and adapt to what's going on, without the time required for that to flow through all the channels in the more traditional hierarchical model.

It’s better if that’s the problem you have. If the problem you have is that you’re growing fast and it’s an uncertain future world, then adaptability is more important than theoretical efficiency.

Bronwen Clune: Scalability sounds like something that must sound very pleasing to someone in your role, Julie? You’ve also had a lot to do with the Team of Teams, do you want to comment on it?

Julie Rogers: Sure. We’re in evolution stage right now and I think one of the things that we’ve come to realize is, this is a very big change and there’s a lot of communication that’s involved around discussing what this change means. In the process we’re actually deciding some of these things, how we go through and implement this while we’re in flight. In a lot of ways I think there’s still some questions about what this really looks like in action, because it’s not like you decide one day and then you flip the switch and the next day it’s actually flowing. There is an evolution in terms of that, so I think that we’re going through the process of communicating it outward and taking on people’s concerns and explaining what this means.

Didier explains it in terms of going through and scaling our business and making us more adaptable. I’m excited to see what it looks like in practice and I think it will probably hit little bumps here and there, but I think for the most part it’s actually going to be a really interesting experiment.

David Ostberg: I’m curious about the bumps that we’re expecting and some of the potential resistance to change. What were some of those that you expected and what are a few that have come up that you didn’t expect?

Julie Rogers: In terms of communication some of the bumps that we’ve seen so far are just interpretations of what it means to be on a team, and where those teams find their direction and make their goals. And being a little more explicit in our communications around does a team actually operate on its own and go chase after its own goals versus actually being tied in with larger group goals and with the company goals? We need a little more articulation on identifying what exactly we mean and some of the language that we’re choosing. Didier, would you add to that?

The definition of “team” as the starting point for changing hierarchies

Didier Elzinga: Yeah. One of the challenges in doing any type of evolution or adoption or changing or setting up anything from an organizational point of view is that there are so many already pre-existing notions of what a word means, and so when we talk about a team, people have all sorts of sense of how that team’s used. An interesting example is, one of the core idea in a Team of Teams type model is that you focus on having largely multi-disciplinary teams, and that’s to allow the team to have all the knowledge and the resources available to go into and to actually create value from start to finish. Oftentimes when people talk about teams, even in an organization like ours which is already pretty fluid and already pretty multi-disciplinary, people will often say, “I’m in the engineering team or I’m in the design team or I’m in the HR team”.

The natural first step is a functional description of what the team is. Even though in this model we actually don’t really have that thing at all, that’s the way people describe it. Part of this process already has been just teasing out some of that and sitting down and talking about, what does it mean to be in a team and what does that mean for you as an individual? One of the things I probably didn’t necessarily expect but has been really interesting is that a lot of the push here is about creating space for autonomy, giving people more context, allowing people to grow and do more as themselves. If you look at some of the other models like Holacracy and other things like that, there’s a lot of emphasis on self-direction.

One of the challenges I think a lot of people face is sometimes they see teams as a limiting factor so they’re like, “No, no. Actually I thought I was going to be allowed to do all this as an individual. I’m being put in a team, that’s clipping my wings. You’re not letting me be a total thing.” When you reflect on that, that is an important and valuable point. The reason you use teams is because, what we’re actually trying to do as an organization is do less but better. One of the challenges for any organization is how do you align people onto a few things, and put all of these efforts together for the organization

One of the motivations for me is a story that comes from the Lean movement. If you’ve watched a 4x100 relay race and you looked at it through a normal management lens, people would be watching the race and then they would say, “This is ridiculous. 75% of our resources is sitting around doing nothing for most of the race. Surely we should have them doing something, running some more laps or doing another event or something because that capacity utilization is terrible”. They’re looking at the wrong thing. The runners don’t keep moving, but the baton never stops and so in an organizational context the baton is the flow of value. It’s what we’re doing, what we’re creating, how we’re making our customers successful. One of the challenges when you do anything like this is we anchor on the individual and we start saying, “How do I maximize what the individual can do any given second?” The challenge as an organization is actually not to do that.

The challenge is to say, “How do we use the sum total of all the people in the company to create a flow of value?” The idea of teams is actually a challenging one, because it means that your needs, not your needs as an individual but how you can contribute is not purely down to what you as an individual can do, but it’s what you with others can do. It’s a very powerful concept, it’s a very hard concept sometimes to fully articulate.

Great work is more important than a nice title

Bronwen Clune: One of the other things that I’ve heard people discussing and I think we’ve chatted about just a couple of time too is what that means for an individual in terms of understanding their trajectory in the company. Because you can see, they’re not made manager and they’re not made whatever. There has been some discussion around that. Is that a conversation you find you’ve had with a lot of people?

Didier Elzinga: Yeah, absolutely. I’m sure people have. I’d be interested to hear the comments. That is actually a problem I expected going in and it’s a problem that will continue to exist, because we’re trained in traditional organizational structures in terms of our sense of worth ... I should caveat this as well with it’s all very well and good for me to talk about all of this. As a CEO you have a somewhat unique respectable position. I can tell people not to have their ego invested in their title. I’ve got the best title in the company so it’s a little bit difficult for me to tell other people not to worry about the title, whilst I have the title of CEO.

Traditionally there’s a lot of stuff that’s invested into where you sit in the organization, that your value is measured by how many people sit below you basically. That we are recognizing your individual value by putting you here, and then we have other people below you and you have decision rights and accountability rights, and all these sorts of things. Most people know that once they get into organizations particularly of any size, your sphere of influence and your sphere of control are two very different things. One of the things you learn as you get more senior is that, actually your sphere of control shrinks.

As a CEO I can actually do very, very little. Occasionally I can whack my fist on the table and demand something happens, but only occasionally. To be totally honest most of the time I don’t have any real direct control. I have influence over a huge number of things, and so you realize that it actually doesn't really matter what your title is. It doesn't really matter where you sit in the organization, the concept of having decision rights is a murky one and that’s something that I’ve seen a lot of people struggle with: as they get more senior they think that suddenly now they can tell people how to do things.

Actually you have less control. You have less ability to tell people how to do things the more senior you get. You have more influence but less control. In a Team of Teams model or a similar structure, it does create a lot of issues for people because you don’t have that anymore. You can't point at something and you can't say, “This is why I’m important”. You can look at the outcome of the work, but you don’t have a job title or other things to support it. If you go back to some of the other things that have been done in the past, like the Toyota production system in Lean and so on, they actually referred to this as the generalized engineer problem. In more traditional hierarchy structures, so in Germany, for example, they had a very strong master/apprentice model which had its downsides, but it also gave people a really clear sense of where they were on a journey, and that if they kept going they would get to a certain point and it was all very well understood.

Then Toyota came through and started reinventing a lot of the way that stuff was done, and people started using multi-disciplinary teams, really empowering people to get involved in a lot more stuff, but in the same way taking away a lot of that traditional hierarchy. What people found was that after two or three years you’d go talk to an engineer and they’d say, “I love the work I’m doing, but I don’t feel like I’m moving forward” because there wasn’t a clear ladder or path that they could see. That is actually a tension that is not an easy one to resolve and not one that I have a deliberate answer to either. It’s just a recognition that at the end of the day doing great work is more important than having a nice title.

Improved employee commitment leads to better engagement scores

Bronwen Clune: Dave, I was thinking, I was wondering when you have massive change like this as a company, do you throw out your engagement surveys from previous things? Do you see this as a new company that you start measuring and learning from, or do you go back and see how you’ve improved from the last time, because it is a pretty massive change?

David Ostberg: It is. I think that’s a really good question, and of course when we’re talking about engagement, we’re talking about how committed people are to the company’s mission and values. Does a person feel proud of the organization? Do they feel really motivated? I would absolutely want to compare a post-organizational redesign engagement course to previous results and see what impact is this having and in what dimensions or in what ways, and what are the key things that are driving any of those differences. Is it around communication and understanding of structure or leadership? Is it something related more to the work or the purpose, individuals feeling like they are actually contributing to the mission and the goals, those kinds of things.

Because if you see real improvements around people’s connectivity to the goals and the mission, then I think you’re naturally going to see the engagement scores improve, at least based on the data that we have from the past.

Bronwen Clune: Do you expect it to go down low first off just because of change? We all have that natural resistance.

Didier Elzinga: There’s a book by Peter Senge, The Fifth Discipline, which was an ‘80s pop psychology business book, but fantastic, and it introduced the concept of systems thinking broadly. When I read it, I bookmarked a chapter that said things will get worse before they get better. When you take out an existing system – even if that system is dysfunctional – and replace it with a new one, everybody takes time, and the initial vacuum is quite hard for most people to take and it takes a while for the new thing to stick in. I’m not saying I would necessarily expect our results to go down, but I don’t expect that suddenly people are like, “This is much better than what we had before” straightaway.

No, it takes time. One thing that I would say is that, having made some of these changes for me came from two places. One, I’ve been here before, so I’ve run a company and grown from 30 people to 130 people in 18 months. I’ve been through that cycle – where we’re at 80 people now – of what it means to get to the next one. I learnt from some of my previous mistakes and some of the things I tried that worked or didn’t work, but it also came from listening to the surveys, and it came from looking at the data that we got earlier, which was showing that people join the company because they were committed to the idea of helping people build culture first companies.

When we talk to our clients we talk about wanting to be intentional about the process, about the place that you create. We were having legitimate conversations and it came up in the survey results, which is ‘I believe in the idea but I don’t see that we’re doing anything particularly different than anybody else in this space yet.’ Some of this is actually coming from thinking about that question, which is what does it mean for us to be a culture first company, and how do we actually do things that we can point to and say, “We do this,” which is different to the way people have done it before, because we’re actually putting culture first. For me the concept of Team of Teams is actually part of the answer to the question of, what does it mean to be culture first?

Bronwen Clune: We keep stopping to say we redesign and restructure.

Didier Elzinga: We’re constantly designing.

Bronwen Clune: What have we called it? Not restructure, that sounds like people are being fired.

Julie Rogers: There’s so much stigma that comes out of restructure. I think redesign, but Didier is right, it is a constant state of redesign anyway and looking at the design. Any time there’s any sort of movement in the business, there’s always an opportunity for looking at design and the way that teams are designed.

Bronwen Clune: Julie, what kind of input have you had on helping come up with?

Julie Rogers: I think it was a twinkle in Didier’s eye before I even got to Culture Amp, so I’ve been coming in on a lot of the discussion around what this looks like. There’s a lot of details that go into how you build out a Team of Teams, and we have spent a lot of time actually talking through semantics. I think a lot of it has to do with how we design the teams, what are the best ways the teams can be designed, how do we actually go through and figure out who’s making decisions on the teams and how our CAmpers, our Culture Amp people, will be supported both in their career growth, as well as in having obstacles removed and able to get their work done in the best way possible.

Figuring all of that out with also a clear understanding that it’s still an evolutionary process, so having this very clear understanding that this is a work in progress. As we move forward we’ll be learning new things along the way.

Designing an organization where the right people make decisions

Didier Elzinga: The background to this came from probably a couple months ago when I was last in San Francisco. I didn’t come into any of these meetings thinking, “I want to redesign how we run the organization”. It was more we’re continuing to grow, we’re continuing to have new opportunities where we’re thinking about how do we address this issue or how do we improve this? It was really an evolutionary conversation, and when I was in San Francisco the last time Julie and I would catch up in the morning for an hour just to go through stuff, and by the end of that week most of the conversations kept coming back to work design, and what do we need to look like to be the organization, to deliver the sorts of things that we’re talking around?

That was the springboard and then it was a conversation with lots of people throughout the organization, about if we took this lens what would it look like? What would we do differently? How would we change things and what would that mean for this area of the company? I have a bias towards wanting to try things and to experiment, and be thinking about different ways of doing stuff. Along the way I’ve always relied on my co-founders as people if I go to them, “I’ve got this crazy idea” and they’re like, “Actually that could have legs” then I know it’s worth exploring. If they look at me and just say, “Yeah, whatever” then I’ll go back and come up with another idea.

This was one of those processes, where what we’re talking about today wasn’t the idea I had. I can't even necessarily remember that I had a specific idea. This is the result of lots of people taking something, running with it a little bit saying, “What about this? What should we think about here?” Then co-opting other ideas that are out there, and learning from other people too. It’s been fascinating to see the conversations going on around people that have used Holacracy successfully, people that have adapted it to their own needs, other types of self-managing models.

As I mentioned, the Team of Teams book is fascinating, not because what he did was new. The ideas he presents have been done before, but he gives a really good representation of why he did it and the problems that he was trying to solve, and why those problems were new for somebody in his place. There are some really interesting insights into it, because he talks a lot about how we have certain ideas about what's needed to make decisions. The historical context for that has actually changed a lot, and technology has given us the ability to have all of this data, and to know all of these things but it hasn’t actually improved our ability to make decisions, and so you have to find ways in organizations to give the ability, for the right people to make decisions.

That context is actually fascinating. For me a lot of it was realizing that it’s not all new, a lot of it’s going back to ... to use his analogy, if you think about military 500 years ago, the commander-in-chief had no idea what was going on the battle field. They had to trust people to make decisions. They would have loose plans that had to be able to adapt to whatever happened at the time, and there was huge amounts of local autonomy.

That’s actually the situation we’re going back to now, because even though we have all of this amazing amount of flow of data, just because you have it doesn't mean you can necessarily make a better decision than the person that’s sitting on the ground.

Smaller teams and fewer traditional titles create more value

David Ostberg: A question that has come up quite a few times is, how do we communicate this and what does this mean for job candidates, people who are interested in working in Culture Amp? I think in many cases it seems to be almost more of a concern for people who are in the more traditional mid to higher level roles, thinking, “Okay, what does this mean for me as a manager or a director or a lead who has some title and who runs a group of people specifically?”

Didier Elzinga: That’s something that I’ve been doing a little bit of, in terms of interviewing and talking to people that are coming in, and I think you’re right that often the concern would be for somebody who’s like, “ I was the grand VP of this large area with this many hundred people reporting to me”. In that situation I would explain where it comes from and why we’re doing it, and the idea that it’s to focus on allowing people to do work in smaller teams, to have multi-disciplinary teams and to increase the flow of communication across the company. When you sit down and you say to people, “The whole idea here is that we’re creating teams that make sense, in terms of creating value, that you as an individual are not measured by whether or not you are a team leader, whether you are in this team or that team; that any person no matter how senior they are can actually just be in a team.

My title is the CEO and that gives me a range of responsibilities, but in a Team of Teams model I could be leading a team. I could actually just be in a team too, and that’s the seat from which I do my work. It’s definitely confronting for people. It’s definitely challenging for people, but what I found which has been really heartening is that, a lot of people at first are like, “What about this and what about that?” Then after a little while they’re like, “Actually I can see the value in this”.

Because people that have been in an organization, who’ve got that grand title, spend so much of their time trying to work out how to get stuff done outside the lines. That gets back to the heart of what the Team of Team model is all about. If you could predict the future perfectly, if you knew exactly what was coming, you knew exactly what work was needed, you knew exactly who the clients were and all that sort of stuff, you would not need a Team of Teams model, and a traditional hierarchical model would work perfectly. You would get the most value out of the resources you had. It’s extremely efficient to design by spreadsheet, say, “Exactly, I need this person at this time to do this thing and then I’ll put them over here, and then I’ll put them over there”.

Of course the world doesn't work that way, and so what people find is in the organizations that they have, they design the organization along functional lines or whatever, and then as the world moves they’ve realized that they’re constantly fighting their own organizational structure, to be able to create value. The bits that kill you are the bits between departments. You talk to companies all the time and their sales and marketing don’t talk to each other. They try to but the whole organizational structure is designed to stop them, and so once people get into that mentality, what I found is that even really senior people actually open up to it and say, “Yeah, this what I’m looking for in my next step, is I want to go somewhere I can just do great work, and be surrounded by people that are doing great work, and work with them to achieve outcomes”.

That makes both us and our customers happy. It’s a challenge, though. It’s definitely a challenge, and it goes back to the ego thing that I was talking about before.